Online Poker Games

As the saying goes, Death and Taxes are the only certainties in life, so I find it interesting that the most recent challenge to the infamous UIGEA law in the US aims at convincing US lawmakers that a regulated and open online gaming industry stands to bring a boom in government tax revenues.

“Before us is a tremendous opportunity to protect US consumers and recoup billions of dollars that should be collected by the Internal Revenue Service,” said Congressman Jim McDermott of his new Internet Gambling Regulation and Tax Enforcement Act proposal. “These are revenues that are desperately needed, given that we are at war and face difficulty financing the nations priorities.”

‘Given that we [US] are at war’… Wasn’t UIGEA supposed to be an effort to thwart terrorists from accessing a valuable source of funding? Is America now going to let potential terrorist fundraisers operate online gambling so they can tax them to pay for the war that is meant to be destroying terrorism? Things must be looking pretty bad on the ol’ fiscal front in the US if this is the argument being used to persuade lawmakers to get rid of UIGEA.

In my opinion, the only valid reason for jettisoning UIGEA is that it is the fair and honest thing to do if the US claims it is a free market society. If the US government gets to tax online bingo operators and online bingo halls by getting rid of UIGEA, I have no problem with that. It works in the regulated UK bingo online industry and everywhere else that is enlightened enough to see the sense of this.

However, I feel a little uneasy that free online bingo operators may eventually be able to re-enter the US market, only to find that they are being taxed to fund a dubious quagmire.

As the saying goes, Death and Taxes are the only certainties in life, so I find it interesting that the most recent challenge to the infamous UIGEA law in the US aims at convincing US lawmakers that a regulated and open online gaming industry stands to bring a boom in government tax revenues.

“Before us is a tremendous opportunity to protect US consumers and recoup billions of dollars that should be collected by the Internal Revenue Service,” said Congressman Jim McDermott of his new Internet Gambling Regulation and Tax Enforcement Act proposal. “These are revenues that are desperately needed, given that we are at war and face difficulty financing the nations priorities.”

‘Given that we [US] are at war’… Wasn’t UIGEA supposed to be an effort to thwart terrorists from accessing a valuable source of funding? Is America now going to let potential terrorist fundraisers operate online gambling so they can tax them to pay for the war that is meant to be destroying terrorism? Things must be looking pretty bad on the ol’ fiscal front in the US if this is the argument being used to persuade lawmakers to get rid of UIGEA.

In my opinion, the only valid reason for jettisoning UIGEA is that it is the fair and honest thing to do if the US claims it is a free market society. If the US government gets to tax online bingo operators and online bingo halls by getting rid of UIGEA, I have no problem with that. It works in the regulated UK bingo online industry and everywhere else that is enlightened enough to see the sense of this.

However, I feel a little uneasy that free online bingo operators may eventually be able to re-enter the US market, only to find that they are being taxed to fund a dubious quagmire.

The Internal Revenue Service just can’t stay out of your pockets, even when you are taking risks to earn.  In fact, the IRS believes it is entitled to your winnings if you have good luck worth 0 or more at a horse track or casino, 00 or more if you hit at bingo, and when you bring in 00 or above playing keno.

The Internal Revenue Service refers to these sums, as “qualifying amounts” and the establishment where you are gambling will take your social security number and issue you an IRS form W-2G when you reach these “qualifying amounts.”  It’s important not to try and trick the house by supplying a false social security number, as it could land you in a lot of hot water.

Even though the gaming establishment will not report lesser earnings, it is your duty to report them on your income tax return, none-the-less.  Although the Internal Revenue Service probably would not catch on to your small winnings, since the gaming establishments don’t report them, they may get suspicious if you are only reporting gambling earnings associated to a W-2G.  They figure that you are just not reporting your lesser earnings since you obviously gamble.

You can deduct your losses at gaming establishments, but not if your losses exceed your winnings.  If your losses do exceed your winnings, maybe you should quit gambling, right?

If you like to gamble, it is probably smart to keep a recorded account of your earnings and losses, including where you won and lost, and when.

You must report all monies received from gambling and any non-cash winnings, as well, on your 1040 income tax return.  You cannot file a 1040EZ form when reporting your gambling winnings, as you will need to itemize these earnings and deductions.  If taxes were withheld from your winnings, you need to report that on the W-2G form the gaming establishment will send you in the mail and transfer it to the total payments section on your 1040 form when filing your income taxes.

To prevent the Internal Revenue Service from getting too curious, you should attach all forms, including the W-2G to your income tax return.

Also be aware that any “comps” you receive from a gaming establishment are also considered taxable by the Internal Revenue Service.  In this case, you will need to figure the fair market value of the “comps” in order to comply with reporting them.

You can deduct your losses at gaming establishments any time, but not if your losses exceed your winnings.  You can only deduct the amount you spend to win.  In other words, if you gamble 0 and win 00, the most you can deduct is the 0 you lost.

In fact, if you win 0 or more at a horse track or casino, 00 or more if you hit at bingo, and 00 or above playing keno, you have won enough to have to report the income.  The Internal Revenue Service refers to these sums, as “qualifying amounts” and the establishment where you are gambling will take your social security number and issue you an IRS form W-2G when you reach these “qualifying amounts.”

You must report all monies received from gambling and any non-cash winnings, as well, on your 1040 income tax return.  You cannot file a 1040EZ form when reporting your gambling winnings, as you will need to itemize these earnings and deductions.

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Winnings are subject to withholding if the amount won is 00 or more or more than 300 times the amount wagered.  If you fail to provide the gaming establishment with your Social Security number they may hold back up to 28% of your winnings in taxes.  If taxes were withheld from your winnings, you need to report that on the W-2G form the gaming establishment will send you in the mail and transfer it to the total payments section on your 1040 form when filing your income taxes.  To keep the Internal Revenue Service from getting too curious, you should attach all forms, including the W-2G to your income tax return.

Even though the gaming establishment will not report lesser earnings, it is your duty to report them on your income tax return, none-the-less.  Although the Internal Revenue Service probably would not catch on to your small winnings, since the gaming establishments don’t report them, they may get suspicious if you are only reporting gambling earnings associated to a W-2G.  They figure that you are just not reporting your lesser earnings since you obviously gamble.

When winning non-cash items like cars, jewelry, or clothing, these items are subject to tax at their fair market value.  

Also be aware that any “comps’ you receive from a gaming establishment are also considered taxable by the Internal Revenue Service.  In this case, you will need to figure the fair market value of the “comps” in order to comply with reporting them.

Get the Form

Whenever you win a “qualifying amount” at a casino, they are legally required to report it to the IRS. Therefore, they will collect your social security number and send you an IRS Form W-2G. As such you want to make sure to report these winnings on your tax returns because the IRS obviously already knows about them. Do not make the mistake of trying to avoid the taxes by giving the casino incorrect information as this is very illegal and could get you into a lot of trouble.

Qualifying Amounts

According to the IRS, a casino will need to report your winnings to the IRS if you win: 0 or more at a casino or horse track, ,200 or more at bingo game, or ,500 or more in a game of keno. Depending on your winnings the casino may even withhold taxes from your payout.

Smaller Fortunes

Although smaller winnings will not be automatically reported to the IRS, it is still your legal duty to report them. While the IRS may not catch you in the act if you do not report these smaller winnings once or twice, they may get suspicious if you report gambling winnings often, but only those that are verified by a W-2G Form.  

On the 1040

You must report your gambling winnings, prizes, or non-cash prizes on your Form 1040 come tax season. They will need to be put on line 21, with “other income”. 1040EZ forms cannot be used to report gambling winnings.

Gambling Losses

In addition to reporting your gambling winnings, you will also want to deduct your gambling losses. However, you cannot report gambling losses that exceed your total gambling winnings. When you deduct the losses, do so on Schedule A on IRS Form 1040 as an itemized deduction.  

Keep Track

It is both helpful and smart to keep a thorough log on your gambling activity, including winnings and losses, as well as where the gambling took place. There are several reasons why doing so is a good idea, including but not limited to the possibility of an IRS audit. It will also make things easier when you need to prepare your return next April.  

Taxes Withheld

Taxes withheld from your winnings should also be reported in Box 2 of the Form W-2G you receive in the mail. Be sure to report these amounts on your Form 1040 in the total payments section.  

Attach All Forms

To satisfy the IRS, be sure to attach all forms regarding your gambling activity to your tax return. This includes your W-2Gs or any other gambling-related tax documents.  

Comps

You may think that people who get free hotel rooms, and tickets to shows from places they gamble at are pretty lucky. However, these “comps” do not come without a price. They are all considered gambling winnings by the IRS, and are subject to the same taxes.

Get A Refund On Your Casino Winnings Tax From The Internal Revenue Service.

Internal Revenue Service assessed US taxes on your jackpot winnings?  You are entitled to a refund of your casino winnings tax.

The Internal Revenue Service mandates a 30% casino winnings tax on the gambling winnings of US non-residents.  Luckily, the US-Canada tax treaty allows Canadians to offset gambling losses against their gambling winnings.  For example, if you have won 00 USD on a slot machine jackpot, and have 00 USD of any US-based gambling losses, you are entitled to receive a complete refund of your casino winnings tax.  

The Internal Revenue Service applies the casino winnings tax on some types of gambling and not others.  The casino winnings tax is applied to the winnings of the following activities:

Slot winnings;
Bingo winnings;
Keno winnings;
Lottery winnings;
Poker tournament winnings;
Horse Racing winnings;
Dog Racing winnings; and
Jai Alai winnings.

The threshold for US taxes varies with the activity.  For example, slot machine winnings of 00 USD or more are eligible to be taxed, whereas lottery wins of 0 USD AND at least 300 times the original wager have US tax applied.

The Internal Revenue Service also exempts several wagering activities from gambling tax.  In general, table games are not taxable.  Examples include: baccarat, big 6 wheel, blackjack, craps, and roulette.  However, table game tournaments are taxed.  Thus you may win big playing poker, and will not be assessed tax.  But if you win big in a poker tournament, you will be assessed tax.  Complicated enough?

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In any case, Canadian gambling jackpot winners (and residents of many other foreign countries) are eligible to have all or part of their US casino winnings tax refunded.  

If you are a Canadian and have been assessed the casino winnings tax, you are legally entitled to reclaim a gambling tax refund.  

The casino winnings tax comes along with IRS form 1042-S.  Gambling jackpot winners who have lost or misplaced their form 1042-S are legally entitled to a copy from the casino that initially issued it.  The casinos are obligated to have records of their issued 1042-S forms.

Gambling jackpot winners have three years (from the time of the gambling jackpot) to apply for a gambling tax refund.  Don’t let the Internal Revenue Service keep you from your money!

If the Internal Revenue Service has assessed casino winnings tax on your gambling jackpot, or if you want more information, please contact US Gambling Refund at 1-888-TAX-0TAX (1-888-829-0829) for help.

The IRS Imposes Casino Taxes On Certain Gambling Wins

Many Canadian gamblers patronize US casinos and similar US based gambling establishments.  Some of the Canadian gamblers may get lucky and may celebrate a big slot machine jackpot or bingo win.  Unfortunately a large slot machine jackpot or bingo win will be accompanied by the dreaded IRS casino taxes.  Luckily Canadian gamblers are eligible for a US gambling refund for their casino taxes.

When Are Casino Taxes Levied?

The IRS levies its 30% casino taxes on certain games and certain specific jackpots over a minimum threshold.  Casino taxes are assessed for any slot machine jackpot or bingo win of at least 00.00 USD.  Keno wins of at least 00.00 USD and over are assessed casino taxes. Table games are generally not subject to casino taxes, but winnings from table game tournaments are subject to casino taxes. If you have been presented with an IRS form 1042-S at a gambling establishment, it means the 30% casino taxes have been deducted from your gambling jackpot.

What Recourse Do I Have To Reclaim My Casino Taxes?

Under the Canada-US tax treaty, Canadian gamblers are afforded the same opportunities for casino tax deductions as American taxpayers.  American taxpayers who gamble are allowed to deduct their taxes on gambling wins by their gambling losses.  Thus any gambler with gambling losses can reduce his or her gambling taxes. Gamblers whose gambling losses meet or exceed their gambling wins will have the entire amount of their casino taxes negated.

What Process Is Used To Claim A US Gambling Refund?

Canadian gamblers generally use Certifying Acceptance Agents to reclaim the taxes on any US based gambling win.  Certifying Acceptance Agents are licensed by the IRS specifically to act on behalf of non-US clients in their dealings with the American tax authority.  Certifying Acceptance Agents have the requisite training and experience to handle cross border taxation issues.

The process used for a US Gambling Refund does not vary depending on the taxed gambling activity.  Thus a slot machine jackpot, and a bingo win will require the same process to claim a US gambling refund. The Certifying Acceptance Agent first obtains an Individual Taxpayer Identification Number (ITIN) from the IRS on behalf of the client.  Then, an IRS tax refund application is sent to the IRS.  The entire process to obtain a US gambling refund takes 12 to 16 weeks to complete depending on the IRS’ workload and the time of year in which a US gambling refund is applied for.